Can an employee make regular IRA contributions into a SEP-IRA?
The answer is generally “yes.” However, the extent to which a deduction will be allowed for the contribution may be limited by participation in the SEP or any other qualified pension plan. The employee should consult with their tax advisor to determine the amount of deductible and nondeductible contribution(s) available to them. How will distributions be taxed? Distributions will be taxed as ordinary income. If the participant is under age 59 1/2, penalties may apply. How do my employer’s contributions affect my taxes? Your employer’s contributions to your SEP-IRA are excluded from your income rather than deducted from it. Your employer’s contributions to your SEP-IRA should not be included in your wages on your Form W-2 unless there are contributions under a salary-reduction arrangement. Unless there are excess contributions, you do not include any contributions in your gross income; nor do you deduct any of them. What are excess contributions? If your employer contributes more than i
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